Semanoff Ormsby Greenberg & Torchia: How to handle employee terminations to mitigate your legal risk

The legal exposures that come with terminating employees are always present. But with a troubled economy continuing, increases in certain types of claims, more publicity in the media about employment discrimination cases, and the Department of Labor and state agencies spending greater resources on investigation and enforcement, it’s more important than ever to take potential legal exposure seriously.

“An employer should absolutely take the time to review all circumstances of the employee’s time with the company prior to terminating the employee,” says Alfredo M. Sergio, member at Semanoff Ormsby Greenberg & Torchia, LLC.

Smart Business spoke with Sergio about what to do before, during and after employee terminations.

What considerations need to be weighed before firing someone?

There are a number of questions to ask before terminating an employee. Employers may still choose to terminate, but should proceed carefully. For example, consider whether the employee:

  • Is in a protected class such as age, race, religion, national origin, disability, gender, sexual orientation or veteran.
  • Suffers from a medical condition, disability, is pregnant or is taking care of a family member with a disability.
  • Has ever requested a disability-related accommodation, or taken or requested pregnancy or medical leave.
  • Has ever made a claim of discrimination, sexual harassment or retaliation, or has ever threatened to sue.
  • Is subject to an employment contract, a non-compete, non-solicitation, confidentiality and/or inventions agreement.
  • Needs to cooperate with the company after being separated, e.g., in other litigation or on a project.

If any of these apply, you may want to consult with your attorney before you proceed with termination. Of course, if the soon-to-be terminated employee is violent or threatens anyone, immediate termination may be warranted.  

What else might employers do to prepare before terminating an employee?

Employers should document the decision to terminate when the decision is made, and accurately document employees’ conduct and performance throughout their employment. This will help the company prove its legitimate reasons for termination and put the company in a better position to defend itself.

Before the termination discussion, employers should think about how, where and when they will communicate the termination, and be prepared to answer questions about pay and benefits.  Employers should think about changing passwords, getting back keys, security badges, computers, tools, equipment, customer lists and/or obtaining summaries of current projects.

How should the termination be handled?

Consider whether there are any written policies regarding termination. Treat the employee with dignity and be professional, and keep the meeting brief. The supervisor communicating the termination may also want to have a human resources representative present. At the meeting/in a separation letter, set forth the reasons for termination. Remind the employee of his or her obligations if the employee signed a non-compete, non-solicitation or other agreement. In some instances, it may be appropriate to obtain a release of claims from the employee through a severance agreement, which may provide protection and deterrence against future claims.

What do employers need to do afterward?

Employers should pay the terminated employee’s final paycheck within the required time periods, and should be careful they provide the separated employee any notices required under COBRA. Also, plan how to communicate the termination to other employees, since rumors or gossip can have a negative effect on employee morale.

In the end, reviewing possible legal exposure and practical concerns before firing an employee best positions the employer for a smoother transition.

Alfredo M. Sergio is a member at Semanoff Ormsby Greenberg & Torchia, LLC. Reach him at (215) 887-0200 or [email protected].

Insights Legal Affairs is brought to you by Semanoff Ormsby Greenberg & Torchia, LLC

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